If you’ve ever encountered a statement about a future event that could only be** true or false**, then you’ve already come across a yes/no proposition. ‘Labour will win the next general election’. ‘My train is going to be late’. ‘Interest rates will go up next year’. All of these are yes/no propositions because they will end up either being right, or wrong.

In the world of finance, digital 100s are essentially bets on whether statements about the **future behaviour of a market** will be 'true' or 'false'. For example: ‘EUR/USD to be above 11446.1 at 4pm’ or ‘Silver to be below $14.00 per ounce at the close of trading’.

## How do digital 100s work?

Assume you were faced with the following proposition: ‘FTSE 100 to be above 6400 at 3pm.’

This will ultimately turn out to be true or false – the FTSE 100 will either be above 6400 at 3pm or it won’t. The probability of it being true, however, will **fluctuate **according to factors like the volatility of the underlying market and the amount of time left to expiry.

In digital 100 betting, this variation in probability is represented by a price range of 0 to 100. The closer the price of the digital 100 is to **100**, the more likely the digital 100 provider thinks the statement in question will be **true**. The closer it is to **zero**, the more likely it thinks it will be **false**.

Bearing this in mind, if the FTSE 100 does indeed end up being **above** 6400 at 3pm, the statement would be **true **and the digital 100 would close with the price settling at **100**. If on the other hand the FTSE is **at 6400 or below **at 3pm, the statement would be **false **and the digital 100 price would settle at **0**.

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